Discover more from The 21 Hats Morning Report
Are Franchise Owners Really Employees?
A Massachusetts court rules that 7-Eleven franchisees are covered by state labor laws and can sue for being misclassified.
Here are today’s highlights:
Retailers are not banking on the supply-chain chaos going away.
Black-owned businesses are doing worse than they were a year ago.
Only 38 percent of job candidates attach cover letters to their applications.
Karen Clark Cole explains why the comments of a brand’s super fans can be misleading.
Would you pay millions for an old YouTube video?
Job applicants are refusing to write cover letters: “Many hiring managers say a sharp cover letter remains one of the best ways to make the case for why you are the right person for the job. Yet many job seekers say the self-promoting exercise is too torturous and time-consuming to be worth the effort for a less-than-dream role. It’s also just plain insulting, they argue, since it’s often an algorithm, not a human, that screens and sorts the applications. Now, as employers struggle to fill millions of openings, job seekers are using their leverage to say no to what, until recently, was a must for landing a decent position.”
“‘People are fundamentally fed up with having to do so much to get a job,’ said Gianni LaTange, a 27-year-old in New York who works in tech. Ms. LaTange calls cover letters an antiquated hiring practice and no longer applies to jobs that require them.”
“A recent ResumeLab survey of 200 hiring managers and recruiters found 83 percent said cover letters were important to deciding whom to hire, especially when it came to understanding why the applicant wanted the job or explaining a career switch or break.”
“Yet only 38 percent of candidates attach cover letters to their applications even when it is requested, according to ResumeLab, which provides advice and online templates for building résumés and cover letters.” READ MORE
Opinion: It’s not that Americans don’t want to work, or that they hate their jobs: “All of these stories are wrong. The first one is the easiest to debunk. No one wants to work anymore? Well, the unemployment rate is under 4 percent. More than 80 percent of prime-age workers are employed or looking for work. The labor-force-participation rate for workers ages 25 to 54 is now higher than it was for most of the Obama administration. These facts don’t describe a country where ‘no one’ wants to work. They describe a country where almost everybody wants to work, and where many nonworkers—including many mothers and caregivers—’desperately’ want to get back to work but can’t.”
“The story that most Americans hate their job doesn’t hold up, either. In April 2021, the Conference Board reported that job satisfaction in the first year of the pandemic was the highest that the organization had recorded since 1995.”
“Finally, let’s address this pesky claim that the Great Resignation, or ‘quitagion,’ or whatever is a reflection of job hatred and burnout. The Great Resignation isn’t a dramatic shift in worker sentiment. It’s a dramatic shift in worker opportunity.”
“We probably shouldn’t even call it the Great Resignation. It’s more like the Great Job Switcheroo.” READ MORE
In Massachusetts, the Supreme Judicial Court has ruled that 7-Eleven franchise owners can be considered employees, “allowing them to be covered by state labor laws regarding wages, overtime, and other employment protections. The decision overturns a ruling in U.S. District Court that the Federal Trade Commission’s franchise rule conflicted with the state’s independent contractor statute to determine if workers are employees, and therefore the statute didn’t apply to 7-Eleven franchisees. Following the high court’s decision, Massachusetts 7-Eleven franchise owners can now proceed with their case in district court and seek damages from the parent company for being misclassified.”
“The franchisees claim that, unlike a typical franchisor that simply charges a fee for store owners to license its brand, 7-Eleven exerts tight control over every aspect of the business.”
“The company manages the books and takes half the revenues, paying the franchisee with what’s left over after the cost of doing business is deducted, said Shannon Liss-Riordan, the attorney representing the franchisees.”
“‘The franchisees are really glorified store managers that have been made to pay tremendous amounts of money for the privilege of managing 7-Eleven stores,’ she said.” READ MORE
Karen Clark Cole explains why you can’t always believe what your super fans tell you: “Often, if somebody loves a brand, for example let’s say Starbucks, and they had a bad experience ordering—their online mobile order was terrible for some reason—they might still tell you that it was a really good experience, because they love that brand so much. They have such loyalty that they take it upon themselves: ‘It was my fault. I didn’t press the right button,’ or ‘I didn’t do this or that.’ And in fact, of course, it’s not their fault because it should be so dead easy that there’s no possibility for error.’”
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
Black-owned business are doing worse than they were a year ago: “In the weeks and months after the U.S.'s 2020 racial reckoning, as protests erupted across the country following George Floyd's murder, Black-owned businesses received a historic outpouring of support. Founders such as Rochelle Porter, who owns the decor and activewear brand Rochelle Porter Design, saw their sales and follower counts soar. At the onset of the Covid-19 pandemic, Porter started selling masks, and as people quarantined, they outfitted their homes with her vibrant textiles. Then, press coverage sparked a flood of sales as social-justice issues took center stage. But as the pandemic wore on, much of that consumer enthusiasm waned. ‘We've definitely seen a leveling off since then,’ said Porter, who's in Atlanta.”
“A new report from Meta found that compared to last year, businesses run by underrepresented founders were 14 percent more likely to report lower sales than other businesses.”
“Meta's report on the global state of small business — which surveyed 5,324 small-business leaders in the U.S. (and more than 24,000 globally) — cited the same disparity in its findings from the previous year, which were released in June.”
“When broken down further, the report found that 51 percent of Black-owned businesses were experiencing record-low sales compared to January 2021, versus 36 percent of all U.S. businesses.”
“Black-owned businesses were also the most likely group to report closing in the past year.” READ MORE
Retailers say they are making plans assuming that the supply-chain issues will not get better: “Gordon Industries, an importer and wholesaler that operates such retail websites as ChristmasCentral.com and PoolCentral.com, is not taking anything for granted. Gordon Industries now acts as if supply chains will remain slow and unreliable forever. ‘I think this is the way things will be from now on,’ says Laura Gordon, director of public relations and communications at Gordon Industries. With no end to supply chain problems in sight, she says Gordon Industries has been ordering much earlier than usual. Gordon says that before Christmas 2021, the retailer ordered enough inventory for at least the next two holiday seasons. Previously, its practice was to start ordering Christmas inventory in January of each year in the past.”
“She says the retailer also has cut its assortment dramatically to prioritize keeping its highest-demand products in stock. Gordon says the retailer has trimmed ‘many SKUs,’ but declined to reveal specifics.”
“Nobody knows when supply chains will return to some version of normal. The best strategy for retailers is to adapt to the current situation, retailers say. That means planning inventory levels that assume deliveries from abroad will be slow and erratic. Retailers believe just-in-time delivery — the practice of receiving goods at the time they are needed for sale — is too risky for now.” READ MORE
China is locking down 25 million people in Shanghai, half of the city at a time: “Any suspension of commercial activity in Shanghai will likely have global ripple effects as the city is one of China’s primary centers for finance, manufacturing and goods trade. The city hosts the regional headquarters of hundreds of multinational companies and manufacturers like car makers Tesla Inc. and General Motors Co. run factories there. Shanghai reported 2,676 confirmed coronavirus cases for Saturday, all but 45 of them asymptomatic, according to a social media post by the Shanghai government.”
“Companies and factories will be allowed to maintain operations under so-called ‘closed-loop production,’ a term that has been used by local governments in the past to refer to businesses operating in a bubblelike environment similar to a system used during the Beijing Winter Olympics in February, with staff working, living and staying within the factory campus, without leaving the site.” READ MORE
Jennifer Sey walked away from a chance to lead Levi’s, raising questions about how much control companies have over what employees say in public: “Ms. Sey’s outspokenness drew criticism both inside and outside the company, including threats of boycotts. The tweets came when Levi’s was using public health guidance to manage protocols across hundreds of stores and in distribution centers. But Ms. Sey said she was speaking as a concerned mother, not a corporate executive. She also noted that Levi’s — which has been vocal about hot-button issues like gun control — had not previously complained when she posted on social media in support of Democratic politicians like Senator Elizabeth Warren or more liberal causes.”
“Levi’s disputes Ms. Sey’s account of events, including her claims that she was punished because her views veered from ‘left-leaning orthodoxy’ and that she walked away from a $1 million severance package in order to be able speak freely about the company.” READ MORE
THE CREATOR ECONOMY
Patreon CEO Jack Conte explains why the platform emphasizes creators over advertisers: “Since launching in 2013, Patreon has become the platform of record for creators to charge monthly or annual subscription fees for access to their content. Patreon has amassed 8 million patrons (i.e., subscribers to creators) and has paid out $3.5 billion to more than 250,000 creators. (It originally crossed the $1 billion threshold in 2019.) The company itself was valued by investors last year at $4 billion.”
“‘We don’t work with brands. We never have. And that creates a very different set of incentives, a very different set of governance metrics for the business,’ he says.”
“‘Our primary customer is creators, and so the way we’re going to build video ends up being incredibly different from something like YouTube or Facebook and the way they build video.’”
“‘We’re not trying to get billions of people on the platform and be able to build personalized content, recommendation algorithms, and discovery,’ Conte continues. ‘The reason we don’t need to do that is because with just a few million patrons, Patreon is sending a billion and a half dollars a year to creators.” READ MORE
Startups are investing millions in old YouTube videos: “Both Spotter and Jellysmack — another Softbank-funded company that works with creators to help monetize content across platforms like YouTube, Facebook, and Snapchat — view catalog investing as the next frontier in YouTube content monetization. The two companies are betting that future ad revenue on older YouTube videos will supersede the upfront cost of paying creators for their content. ‘We have a very good view into the performance of how their catalogs work over time,’ Jellysmack's president Sean Atkins told Insider in January. ‘There's a lot of value in the library that, particularly in YouTube, that these creators have generated, but they have to wait generally a long period of time to extract the whole tail of that value.’”
“Like music catalogs and film libraries before it, buying old YouTube videos requires substantial capital. Spotter told Insider it's already spent over $350 million buying up content from creators like Unspeakable, MrBeast, Dude Perfect, and cooking creator Aaron Jay Brown.
“The company said it aims to spend another $650 million — for a total of $1 billion invested — over the next 18 months.”
“Jellysmack told Insider it's setting aside $500 million to spend on catalog content.” READ MORE
If you see a story that business owners should know about, hit reply and send me the link. If you got something out of this email, you can click the heart symbol, you can click the comment icon below, and you can share it with a friend. Thanks for reading, everyone. — Loren